Labour Would Freeze Energy Prices?

(40 Posts)
CogitoErgoSometimes Thu 26-Sep-13 07:45:33

Much as I'd love a lower gas bill I think Labour has shot themselves in the foot on this one. The disaster that was state regulation, state price control and nationalised industries is not forgotten and I think Miliband has made a big mistake raking up these particular ashes.

Ireallymustbemad Thu 26-Sep-13 07:50:50

Sounds like a good idea to many who don't know how the energy industry works.
Are they going to fix the input costs to power stations then?!?! No, they can't do that so would they force power stations to run at a loss?!? If they were to try and fix the price to the consumer they would not get any power stations running as it would be uneconomical.
Contrary to the public's belief, times in the power industry are really tough at the moment, many redundancies are coming in power generation currently.
Another example of politicians trying to meddle in something they really just don't understand.

longfingernails Thu 26-Sep-13 08:02:02

I think it is good politics.

Of course the policy will be a disaster, leading to lack of investment and probably blackouts, but an uninformed voter is worth as much in the ballot box as one who is prepared to spend 2 minutes thinking.

Onesleeptillwembley Thu 26-Sep-13 08:06:50

Typical labour. Use something to buy votes without any thought to the consequencess.

specialsubject Thu 26-Sep-13 09:41:50

unworkable and won't happen. Needs renationalising, exit from the EU so we don't have to close down perfectly functional power stations, recognition that onshore wind DOES NOT WORK, removal of all greenwash subsidies, campaign for everyone to USE LESS, more nuclear power stations and a big dose of common sense.

never going to happen.

MrJudgeyPants Thu 26-Sep-13 12:23:19

Labour are talking guff on this. On the one hand they want to reduce energy costs, on the other they want energy companies to invest more heavily in renewables. These two ideas are mutually exclusive. One of the main reasons for the upward movement in our bills has been the bad idea which was the renewables obligation legislation - drafted and enacted by Labour when Ed Miliband was responsible for energy and climate change.

All this will do is force the price of energy below the cost of production meaning that energy companies will be better off financially if they stop actually producing electricity!

Of course, the sensible thing to do if it wants cheaper bills for all would be for the state to get its nose out of the energy market completely. Abandon renewables obligations - which sees subsidies being paid by the poorest of our society to some of the biggest and wealthiest landowners in the country - give a green light to fracking and reduce some of the legislation which protects the cartel of the six or so current 'big' providers.

As an aside, and a timely reminder of the perils of state manipulation of this sort, the bog roll situation in Venezuela is quite prescient. For those of you unfamiliar with the Venezuelan toilet roll market - and why would you be - the story is, broadly speaking, this. Worried by increasing costs of living and the effects of inflation, the Venezuelan government sought to introduce price controls on a range of essential goods. One of these essentials was deemed to be good old fashioned toilet roll. The maximum price that could be charged in a shop for bog roll was set at below the cost of manufacture. This meant that the foreign manufacturers decided that, rather than sell their product at a loss, they would rather not sell their product in Venezuela at all. With dwindling supplies in the shops (and a fixed price for that supply) the Venezuelan people began to hoard toilet rolls meaning that the shops soon went empty. To combat this, the government introduced bog roll rationing. I forget what the ration amount was, but I remember thinking that I could get through my months supply after just one good curry! As is the way with these things, rationing led to a black market and people are now reduced to smuggling toilet rolls in from neighbouring countries. Earlier this week I read a story about how the police have confiscated 2500 rolls from smugglers - feel free to insert your own joke about how the soft, strong and very long arm of the law felt relieved on the whole...

The moral of the story is this - you can ignore the realities of the market as much as you want, but sooner or later, you won't be able to ignore the effects of ignoring the market.

CogitoErgoSometimes Thu 26-Sep-13 13:28:02

I was hoping someone in one of the conferences would stand up and say they're going to have a national campaign of insulation, window-replacement and fitting solar panels on all flat sky-facing surfaces (including industrial units). Upgrade the infrastructure quicker than building a power station, wouldn't blot the landscape, and generate not just cheap electricity but lots of jobs.

Loving the loo-roll story. smile

specialsubject Thu 26-Sep-13 13:44:35

me too. And yes, those ideas are great.

also forgot to rant about the 20% VAT charged on all energy saving improvements. Hardly an incentive.

but the concept of using less energy is stupidly obvious, too much so for those in power who are obviously stupid.

niceguy2 Thu 26-Sep-13 13:52:10

Typical labour. Use something to buy votes without any thought to the consequencess.

Yep, that about sums it up. But reading around other popular forums it seems a lot of people don't really care about the long term consequences nor bothered about how/why/where the money comes from. Just as long as they save a few quid.

Scary shit really.

niceguy2 Thu 26-Sep-13 13:59:47

What makes me laugh is all the spending promises that they've announced that Ed Balls still thinks he can cut spending! link

And when he says: "An incoming Labour government would inherit "a very difficult situation" because of Mr Osborne's failure to eliminate the deficit..." he completely fails to mention that

1) Labour came into power with no deficit and left with the biggest peacetime deficit ever.
2) Under the plans put forward at the last election, Labour only suggested cutting half the deficit. So even if they'd hit their own targets they also would not have eliminated the deficit.

Idiots.

MrJudgeyPants Thu 26-Sep-13 14:04:35

Cogito the problem with having a job creation scheme as you describe is that, in this context, jobs are a cost, not a benefit. Look at it this way, we know that an efficient coal, gas or nuclear powerplant employs x number of people and generates all the power we need - X number of people generate Y Gigawatts of power for Z number of pounds.

Widespread employment of people just to install solar panels changes that balance somewhat. We end up with X? number of people to generate Y Gigawatts of power for Z? number of pounds. All we know is that X? and Z? are greater than they need to be to produce Y (which is all we really want) and will, therefore, trend energy bills upwards.

A more sustainable job creation scheme - as is happening in the USA - is to reduce the energy bills as much as possible to the point where it begins to make sense to onshore all of those manufacturing jobs we've lost to places like China over the last few years.

amicissimma Thu 26-Sep-13 17:22:43

The loo roll story reminds me of the 1970s, when, among (many) other things, we had a shortage of loo rolls in UK.

People had some ingenious ideas to solve the problem; my flatmates spent happy hours sawing rolls of kitchen towel in half, then wondered why the loo blocked!

(The joys of the Wilson and Callaghan governments.)

ttosca Fri 27-Sep-13 01:25:04

> And when he says: "An incoming Labour government would inherit "a very difficult situation" because of Mr Osborne's failure to eliminate the deficit..." he completely fails to mention that

Osbourne's economic policies have indeed been disastrous, as with had no growth for 3 years. It has been the longest recovery for over 100 years. And people's wages are now thousands of pounds below pre-crash levels.

> 1) Labour came into power with no deficit and left with the biggest peacetime deficit ever.

I think you should watch who you call idiot, because you're making some pretty idiotic statements. Once again:

a) During the last labour government, there was global financial crisis, where banks were bailed out to the tune of trillions of pounds by the taxpayer and tax receipts plummeted because of an economic recession.

b) Prior to the crisis, the deficit was historically average, or just below average.

The high deficit isn't caused by too much public spending. It was caused by the financial crisis, and subsequent depression, which is why it shot up from around 3% prior to the crisis, to about 8% after the crisis.

You should stop lying. You're only embarrassing yourself.

ttosca Fri 27-Sep-13 01:31:46

UK Historical deficit chart:

https://secure.flickr.com/photos/hmtreasury/5260056945/

Source is HM Treasury

Chipstick10 Fri 27-Sep-13 08:23:26

Labour and mr balls would be a disaster.

BrokenSunglasses Fri 27-Sep-13 08:48:57

It's bollocks, and it does nothing but prove how ridiculously unelectable labour are at the moment.

MrJudgeyPants Fri 27-Sep-13 09:38:26

ttosca by your own admission, after the longest sustained period of growth in this countries economic history the deficit was still 3%. This being on top of a significant tax hike in the years approximately running from 2000 to 2007. In other words, if you can't balance a budget under those conditions, you never can. Don't forget, this was all OPEX spending - this wasn't building for the future either.

As for historical debt, I suggest looking at the period from around 1750. In that data you will see four significant spikes. The first was the price paid to defeat Napoleon. The second was the bill to defeat Kaiser Bill. The third was the price of defeating Hitler and the fourth was to pay for lots of diversity officers and to bribe the electorate to vote Labour. Brown's debt may not be that bad from a historical perspective but for what that debt bought and the penury we will face until it is all paid off, he should be strung up by his bollocks!

niceguy2 Fri 27-Sep-13 11:52:07

Oh ttosca. Your posts do make me laugh.

So let me get this straight. I post that Labour inherited a balanced budget and left with a huge deficit.

You call me a liar yet by your own figures show that they did leave us with a big deficit.

Thank you very much for the laughs.

ttosca Fri 27-Sep-13 14:05:42

MrJudgeyPants and niceguy-

> ttosca by your own admission, after the longest sustained period of growth in this countries economic history the deficit was still 3%. This being on top of a significant tax hike in the years approximately running from 2000 to 2007. In other words, if you can't balance a budget under those conditions, you never can. Don't forget, this was all OPEX spending - this wasn't building for the future either.

Neither the Tory scum nor Labour ran budget surpluses most of the time for the past 30 years:

www.theguardian.com/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data

> Brown's debt may not be that bad from a historical perspective but for what that debt bought and the penury we will face until it is all paid off, he should be strung up by his bollocks!

You mean bailing out the banks? I agree, he shouldn't have. But then if he hadn't, we would probably be in the midst of a revolution right now.

> So let me get this straight. I post that Labour inherited a balanced budget and left with a huge deficit

No. He didn't inherit a balanced budget. He left with a larger deficit because there was a global financial crisis. It was not because he spent too much money on schools and hospitals.

> You call me a liar yet by your own figures show that they did leave us with a big deficit.

Not sure if you're thick or a troll. Deficits are what happen during the middle a recession. Tax receipts plummet.

MiniTheMinx Fri 27-Sep-13 14:58:02

A recent comres poll showed that 69% of people want energy nationalised.

CogitoErgoSometimes Fri 27-Sep-13 18:08:06

A recent poll of whom? Communist party members?

MiniTheMinx Fri 27-Sep-13 20:35:45

Do you know something Cog, when I change my name for a day or two, you agree with me grin

MiniTheMinx Fri 27-Sep-13 21:10:10

"ComRes conducted the interviews by telephone between 30 August and 1 September 2013.

Almost three-quarters believe the UK's energy costs are unreasonable, and 69% said the firms should be nationalised"

www.bbc.co.uk/news/uk-23957608

dialpforpizza Fri 27-Sep-13 21:57:47

MrJudgeyPants the toilet roll situation in Venezuela is interesting (now there's a statement) you say the government set the price below cost of manufacture, is there any evidence to show that is what Milliband would be doing? I thought the concern is around cut in profits available for reinvestment?

(For the record I don't know enough to have a firm opinion yet, though first reaction was glad to see some kind of firm stance being taken.)

MrJudgeyPants Fri 27-Sep-13 22:26:51

dialp the energy market is very volatile so a cap may not be under the cost of production today, but may be significantly under it tomorrow.

As I mentioned upthread, the easiest way to get a sustainable low price is to frack like there's no tomorrow, open up the market to new competition by reducing regulations and abandoning the renewables tariffs. Ed might also like to consider VAT too.

MrJudgeyPants Fri 27-Sep-13 22:37:16

ttosca "Neither the Tory scum nor Labour ran budget surpluses most of the time for the past 30 years."

Yes, but St. Margaret and Major never increased the structural deficit WHILST AT THE SAME TIME raising taxes. Furthermore, between 79 & 97 the debt / GDP ratio went down, and for most of the time their deficits were below the inflation rate.

Face it, Labour pissed lots of our money up the wall PRIOR TO THE CRASH with very little to show for it.

MrJudgeyPants Fri 27-Sep-13 22:38:19

Correction, that should be growth rate, not inflation rate IYSWIM.

dialpforpizza Fri 27-Sep-13 23:16:53

a cap may not be under the cost of production today, but may be significantly under it tomorrow.

Isn't the issue that billions are made in profit regardless of the peaks and troughs in production costs?

Is there no intelligent way of capping, but protecting the companies against loss?

MrJudgeyPants Fri 27-Sep-13 23:22:44

I think an accurate weather vane of whether or not these companies are making excessive profits would be to look at their share prices and dividend payout. When this is done, the energy companies don't seem too out of step with similarly sized businesses.

dialpforpizza Fri 27-Sep-13 23:31:43

Not convinced that means it's ok.

MrJudgeyPants Fri 27-Sep-13 23:41:18

We're also mid-table for electricity costs when compared with the rest of the EU. This doesn't mean I'm against lower prices. One of the better ways of stimulating a moribund economy would be to lower the cost of all forms of energy across the board. I'd just rather that any price reductions are achieved in a sustainable way, rather than by populist state intervention by a politician who doesn't know what he's meddling with.

amicissimma Sat 28-Sep-13 15:43:53

A lot of the price of electricity is the cost of subsidising useless windfarms (ie paying huge sums to wealthy landowners). This is a result of the Climate Change Act from when Ed Miliband was the Energy and Climate Change Secretary.

I'm confused: does Miliband think we should pay more, or less for electricity?

niceguy2 Mon 30-Sep-13 09:14:44

I just read this article which I think presents the facts very well in a non-partian way: Economist.com

Basically it's not going to work and likely to have the opposite effect over the longer term. Our energy prices are in line with other western nations and a lot of it is made up of environmental levies......levies that the previous Labour administration put in place.

So very typically of Labour they cause the problem, sod off then come back proclaiming it's all those nasty Tories fault and the answer is government intervention. Neatly ignoring the fact it was their previous 'intervention' that caused the problem in the first place.

Onesleeptillwembley Mon 30-Sep-13 09:53:26

*A lot of the price of electricity is the cost of subsidising useless windfarms (ie paying huge sums to wealthy landowners). This is a result of the Climate Change Act from when Ed Miliband was the Energy and Climate Change Secretary.

I'm confused: does Miliband think we should pay more, or less for electricity?*

That probrbly depends on who is lining his, or his party's coffers.

niceguy2 Mon 30-Sep-13 10:57:37

I don't think Miliband gives a shit either way so long as he wins a few votes.

Chipstick10 Mon 30-Sep-13 20:03:33

I can't believe the average voter is so easily pleased, so easily won over. I think it's a ludicrous idea that will end in tears.

katieperez Tue 01-Oct-13 12:24:17

Message deleted by Mumsnet for breaking our Talk Guidelines. Replies may also be deleted.

ttosca Tue 01-Oct-13 13:36:08

MrJudgeyPants-

> ttosca "Neither the Tory scum nor Labour ran budget surpluses most of the time for the past 30 years."

> Yes, but St. Margaret and Major never increased the structural deficit WHILST AT THE SAME TIME raising taxes. Furthermore, between 79 & 97 the debt / GDP ratio went down, and for most of the time their deficits were below the inflation rate.

Oh I see, so the goalposts have moved. I'm glad that you finally concede that Labour isn't responsible for the large deficit we now have, and that it was the result of the financial crisis and subsequent recession.

> Face it, Labour pissed lots of our money up the wall PRIOR TO THE CRASH with very little to show for it.

I really don't care. I'm not here to defend Labour. I'm just calling out the lies which you and Niceguy keep repeating. You may want a small state and view all public spending as a sin, but it was not public spending which caused the financial crisis and recession.

And it's certainly not Labour's spending which has caused the UK to lose 3 years of growth, the longest economic recovery in 100 years, and the largest drop in living standards since WWII - that's entirely down to the bunch of psychopaths in government known as the Nasty party.

MrJudgeyPants Tue 01-Oct-13 16:28:39

Ttosca I'm not saying that the Tories were perfect although they were a hell of a lot better than the Red Peril.

The difference is that whilst the 79-97 Tories ran deficits, they did this at a time of falling taxes and, for most of the time, their deficits were at a lower rate than the inflation rate meaning that, in real terms, the debt becomes more manageable over time. This is still not brilliant but it is far from economic suicide.

When Labour came to power, they presided over one of the biggest peacetime tax increases in our history. Not only did they take this money and piss it up the wall, they also borrowed more money, taking our annual deficits above the rate of inflation and pissed that up the wall too. This meant that when the financial bust hit (despite Brown's hubristic abolishing of boom and bust) we were in a worse state than most of our competitors.

This isn't conjecture or opinion, this is historical fact.

So, ttosca, keep looking for your magic money tree solution to our economic problems, keep thinking that our salvation lies in borrowing even more money from our children and grandchildren and, most of all, keep up the hysterical wailing about all those evil, nasty, malevolent types that don't share your outdated and thoroughly discredited opinions. I'm sure it makes you feel a lot better.

MiniTheMinx Tue 01-Oct-13 19:09:21

Its not about magic money trees.

Money is the commodity that is used to value other things, it is also the medium of exchange. It doesn't matter in absolute terms how much money only where that money is at any given moment. Money needs to be in perpetual motion in order to create wealth.

All this simplistic crap about money trees is driven by ignorance.

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